Please answer in 30 minutes

Question 5 (Estimated time allowance: 40-50 minutes) Easy-Chair Corp. is considering replacing its existing equipment that is used to produce comfort recline chairs. This existing equipment was purchase 2 years ago at a base price of $100,000. Installation costs at the time for this old equipment were $5,000. The existing equipment is considered a 5 -year class for MACRS. The existing equipment can be sold today for $40,000 and for $0 in 3 years. The new equipment has a purchase price of $200,000 and is also considered a 5-year class for MACRS. Installation costs for the new equipment are $10,000. It is estimated that this equipment can be sold in 3 years (end of project) for $70,000. This new equipment is more efficient than the existing one and thus savings before taxes using the new machine are $20,000 a year. This new equipment will also require additional working capital today of $12,000; this investment will be recovered at the end of the project in year 3 . The company's marginal tax rate is 20% and the cost of capital is 10%. What is the NPV of this replacement project? The following 6 questions reach the value for the answer. MACRS Fixed Annual Expense Percentages by Recovery Class Year1233-Year5-Year7-Year10-Year33.33%20.00%14.29%10.00%5.00%44.45%32.00%24.49%18.00%9.50%14.81%19.20%17.49%14.40%8.55%15-Year For your answer, round to the nearest dollar, do not enter the $ sign, use commas to separate thousands, use a negative sign in front of first number is the cash flow is negative (do not use parenthesis to indicate negative cash flows). For example, if your answer is $3,005.87 then enter 3,006 ; if your answer is $1,200.25 then enter 1,200 1. What is the initial outlay (10) for this project - the project cash flows at time =0 ? 2. What is the free cash flow (FCF) for year 1 of this replacement project? 3. What is the free cash flow (FCF) for year 2 of this replacement project? 4. What is the net operating profit plus incremental depreciation for year 3 of this replacement project? 5. What is the free cash flow (FCF) for year 3 of this replacement project? 6. What is the NPV of this replacement project